Cloud Channel Summit: Do VARs Really Need to Go Vertical?

Dozens of cloud vendors and potential channel partners gathered in Mountain View, Calif., on November 7 for the inaugural Cloud Channel Summit. The common goal: Connecting the dots between cloud services providers, VARs and resellers to build new revenue opportunities.

Dozens of cloud vendors and potential channel partners gathered in Mountain View, Calif., on November 7 for the inaugural Cloud Channel Summit. The common goal: Connecting the dots between cloud services providers, VARs and resellers to build new revenue opportunities. But guest speakers — including folks from Salesforce.com, CompTIA, GoodData, rPath and more — frequently debated the path forward. Among the key topics discussed: Whether VARs need a vertical focus to succeed in cloud computing.

“Channel vendors have to get used to the idea of less,” said Salesforce.com Senior VP Rod Huddleston, in reference to vendors dealing with a smaller group of channel partners. “If you have stronger relationships that last longer, you can’t have as many,” he continued. “Cloud opportunities are about picking the right partners and investing in their long-term success.” Huddleston led a morning presentation during which he outlined key steps that both cloud vendors and channel partners need to take to build a successful channel program in the cloud.

The topics included:

Vendors Focusing on Customer and Partner Success: Why? Huddleston explained that successful customers lead to successful vendors, and successful partners lead to successful customers. So connect the dots. The success of vendors heavily depends upon partner success.

Understand Economics: Huddleston cautioned cloud vendors not to overestimate “ramp and return” or underestimate initial investment. “Trust that your channel partners are committed because you have selected the right ones,” he said. “If you trust that your partners are in it for the long haul, you will invest differently. It’s a huge invest of time and money, but if you trust your partners then you know that it will pay off.”

Be the Market Maker: Huddleston identified three points for cloud vendors to become market makers — create a marketplace for partners, offer supported sales models and provide thought leadership. “I think if you [cloud vendors] don’t create a marketplace for partners and just give them the technology, you’re missing a really critical step,” he said.

Develop a Team of Evangelists: Huddleston described the cloud as “transformative, disruptive and game-changing,” which are all terms that can create excitement and uncertainty in the channel. According to Huddleston, cloud vendors need a team of evangelists to inspire channel partners and frame the cloud discussion in a positive light.

Going Vertical?

The Cloud Channel Summit also included plenty of debate. One key topic of discussion: Do VARs need to go vertical in the cloud services market?

CompTIA Director of Industry Analysis Carolyn April and GoodData Director of Business Development Cody Cmkovich stressed the need for channel partners to become vertically focused. But Peter Chase, VP of business development at Scribe Software, “We give them [channel partners] the prescription to go vertical, but do they have have the resources to do so? I’m not sure we’ve figured out the vertical play yet,” he said.

rPath Chief Technology Officer Brett Adam said he agreed with Chase when I caught up with him after the event. “I really don’t think the industry has figured out the vertical play either,” Adam said.

Adam himself was involved in another on-stage debate during another panel discussion with Corent Technology CEO Feyzi Fatehi and SoftServe VP Russell Hertzberg. Adam later explained:

“They [Fatehi and Hertzberg] thought I said that customers would have to deal with multi-vendor strategies,” Adam said. “But I think there’s an opportunity for channel partners to be those integrators for the customers.”

Next Moves

Jeff Kaplan, founder and managing director of Think Strategies, organized the summit. Kaplan has a successful track record building and organizing emerging IT communities, particularly in the SaaS, cloud and managed services markets.

Where could the cloud summit go next? Some attendees said there’s room for even more VAR and partner participation in the summit. But VARs must also embrace the idea that the cloud creates partner opportunities, noted Amy Anderson, manager of the Cloud Computing Partner Program at IBM.

“The channel is upset because they think the cloud will cannibalize their business models,” Anderson said. “But the cloud cloud is a way to reinvest business, and if you can talk to the channel about reinventing business, that’s a better conversation to have.”

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